Which Sydney market? There is no ONE Sydney market, there are many. Some areas will fall back 5% I’m almost certain. I’m also reasonably certain some parts of Sydney will grow by 7, 8, 9 or 10% or more in this year 2016.
There are many reading this that only have experience of a flat period in real estate from 2003 to 2011(ish). But this was not a “normal” cycle, just like the 13 years of constant growth preceding it, in the period from 1990 to 2003, was not “normal” either.
Just because Sydney had 2-3 good years of growth 2012 – 2015 does not mean it is in for an extended flat period, in my opinion. Growth was in the order of 20% pa in 2014 & 2015 but this is not “unprecedented”. There were a number of years in the 2000 – 2013 period where growth in some parts of Sydney exceeded 20% pa – notably in 2001 & 2002 and this was not followed by a flat period but instead it continued to grow (in that case for a further 10 years).
You can always point to different factors that drive any one particular cycle – stock market crashes or booms, interest rate rises or falls, APRA regulations, easy or tightening credit, housing stock shortages or excesses, government intervention – grants, negative gearing, stamp duty relief, foreign investment and so on. But just like the tide, the cycles continue on year after year, decade after decade. The only people who benefit from rising cycles are those who actually own real estate, while others watch on or debate the unfairness of it all and how property is ‘so unaffordable’ and ‘Why doesn’t somebody or the government do something?’
Since it is the beginning of a new year in 2016, maybe it is time to make a resolution to buy some real estate? The rules around selecting investment grade property for the best long term capital growth still apply no matter which part of the cycle we are in. Buyers agents, especially those with their own real estate investment portfolios, can add real value to the process.